uh, citation needed? Investors aren't meant to be there to bring 'ideas and experiences', and adding new ones to a company that isn't doing well feels like it would just add more tension and disagreement when what is probably needed is a laser vision that hopefully the founding team should be providing..
What they want and what they are is not necessarily the same.
Plenty of VCs are just dumb pipes for money. There are exceptions.
It’d be like you asking for a citation when Michael Jordan makes a comment about the game of basketball :)
I'd rather hear from the people that took the investment, especially the ones that crashed and burned.
Fred is explicitly stating that it's good for a business to get new investors, and to not just keep taking money from the existing investors. That's the exact opposite of what a typical VC would tell you. When new investors come into a company, the existing VC gets diluted.
How is this advice not in the founders interest?
If a VC went from owning 20% of a company to now own 10% - how is that good for the VC?
Because that's not all that happens. The company also has a bunch more cash which means it's worth more.
You own less of a bigger pie but the actual value of your slice shouldn't change.
If you have 10 out of 100 shares of a company and it has a $10m pre-money valuation, your share of the company is worth $1m.
Now the company raises $2m. The new investors get somewhere between 16 and 20 (newly issued, dilutive shares). Now you have 10 out of 116 - 120 shares. 8.3% - 8.5% of a company worth $12m ($10m + the $2m in cash). Which puts the value of your shares right around your original $1m.
Except now the company has all this cash as well, so you're probably better off.